Royal Dutch Shell investing in green energy, retail power sector

Royal Dutch Shell is investing in cleaner energy projects, including a network of EV charging stations on European highways.

Royal Dutch Shell spent over $400 million recently to expand beyond oil and gas, reduce its carbon footprint

In recent weeks, Royal Dutch Shell has spent over $400 million on a number of acquisitions, including solar power and electric car charging points. The purchases are part of a move to expand beyond its oil and gas business and reduce its carbon footprint.

The cash-rich company has an annual spending budget of $25 billion. These relatively small moves into green energy show the company is slowly shifting to cleaner energy businesses.

But, the recent investments are not limited to renewables. Shell is also betting that natural gas use will increase as utilities scrabble to meet rising electricity demand brought about by an expected surge of electric vehicles in the coming decades.

In December, Shell acquired independent British electrical power provider First Utility for about $200 million, according to several Reuters’ sources.

The purchase of First Utility will be an outlet for Shell’s gas supplies through the retail power market.

Shell declined comment on the deal.

In early January, Shell bought a 43.86 per cent stake in Nashville-based Silicon Ranch Corporation, a developer, owner, and operator of solar energy plants in the United States. Shell had been out of the solar business for 12 years prior to the Silicon Ranch purchase.

In the final quarter of 2017, Shell invested in two projects developing EV charging stations across Europe. As well, Shell has agreed to buy solar power in Britain and develop renewables power grids in Asia and Africa, according to Reuters.

Analysts at Bernstein, in the past five years, Big Oil has invested over $3 billion on renewables acquisitions, mostly solar.

They added that “green” merger and acquisitions activity averages about 13 per cent of total M&A activity.

“However greater scale is needed for the majors to effectively operate and leverage their trading skills in this market, necessitating more M&A,” Reuters reports they said in a note.

Other major oil companies have also invested in clean energy.

Late last year, BP invested $200 million in solar generator Lightsource and Total bought Saft, a France-based battery maker, for $1 billion in 2016.